The Initial Agreement and Deposit
Once an offer has been accepted, a contract for the transfer of legal ownership is prepared by the seller's attorney and an initial deposit of 10% of the property price is paid. This contract is legally binding between the buyer and the seller, and the buyer is legally bound to complete the purchase unless there are any issues relating to title, etc. In such a situation, the buyer can withdraw, and the deposit returned. It usually takes 2-4 weeks between acceptance and exchange of contracts.
How To Hold Title
The Title Search
Before the final payment is made, your attorney will investigate the paperwork provided by the Seller to ensure that the property is owned by the seller and is a legal sale. The Title Search process usually takes between 2 and 3 months and seeks to determine the presence of:
- Any pre-existing mortgage on the property
- Outstanding land taxes owed by the seller
- Outstanding Water bill charges against the property
- Outstanding Electricity Connection charges against the property
- Land encroachments
Doing the Title Search makes sure the buyer won't be responsible for any of the outstanding balances associated with the property or have any unpleasant surprises in the future.
Appraisal and Financing
During this process, It is imperative that you keep in close communication with your lending institution, who will let you know when additional documents are needed to fund your loan. An independent appraisal of the property by a third party Valuer will be required by the lending institution to determine the true market value of the property. This is done so that the lender can confirm their investment in your property is accurate. Once the bank's lawyer has received all required documents from the seller and/or your lawyer, and everything is in order, he or she will update the searches and advise the bank that it may disburse the loan. The loan will be net of the seller's expenses such as property transfer tax and stamp duty on the conveyance, and of stamp duty on any releases to be given by the seller.
If you are financing through a mortgage your lending institution will require you to purchase insurance on the property. The value will depend on the lending institution and the purchase price of the property and your lender's interest as mortgagee must be noted on the policy. Be sure to insure only for the value of the house that is on the land and not the land that is under it. If you do not subtract the value of the land when deciding how much homeowner’s insurance to buy, you will pay more than you should. If you over-insure, you will only get the actual cost to rebuild in the event of damage.
As an affiliate of CGM Gallagher, one of the largest and oldest insurance brokers in the Eastern Caribbean, we are able to help you select the best insurance for your property type at the most competitive rates. To find out more about this service, Contact Us today.